pricing-strategy

There are many pricing decisions startup founders get wrong. Source: Unsplash/Tech Daily.

Finance
Faith Forster and Liz Kaelin

How to set up an effective pricing strategy

Authors
Faith Forster and Liz Kaelin
Startup Advice
9 minute Read

Whether your startup product is a B2B Software-as-a-Service (SaaS) platform, a marketplace, or a B2C mobile app, getting your pricing strategy right is one of the most common and difficult challenges facing early stage founders.

Early stage tech startups almost always under value their products, which is largely a reflection of their own confidence in the product rather than the value of the problem they are solving. By under-valuing your product, you are not only leaving money on the table, you are also lowering your perceived value in market and risk turning off more sophisticated customers who will be more valuable to your startup in the long run. 

On the other side, in the introductory phase of your product launch, you won’t have the credibility of existing products in market so a higher price may become a barrier for potential customers to trial your product. As well as gaining precious revenue, early adoption is essential to demonstrate traction, validate your product and start gaining organic growth — all important indicators for potential investors.

Getting this wrong can have a double hit on your back pocket, resulting in a drop in both revenue and investment potential. So what’s a startup founder to do? 

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